Lessons from Estée Lauder's parental leave settlement

Estée Lauder settled a dispute with the U.S. Equal Employment Opportunity Commission over the agency’s first lawsuit targeting a parental leave policy that gave new mothers more time off than new fathers, in an agreement that signals a shift in how corporations and regulators respond to such policies.

The settlement, in which the company admitted no fault, included a $1 million payment to more than 200 male workers and policy changes at the company. What the New York-based cosmetics giant agreed to this month—and where the agency came down against the company—could be instructive to employers.

Related: More companies embracing gender-neutral parental leave policies

Parental leave and paid time off have increasingly grabbed more attention in the political and corporate landscape. The United States lags behind almost all developed nations for its lack of a national paid leave policy and employment attorneys say issues surrounding leave could play a central role in the imbalance of power between men and women in the workplace.

The case against Estée Lauder highlighted broader questions about whether men should be equally considered for parental leave at a time when more companies are offering flexible packages to all employees, including men, adoptive parents and same-sex couples.

At the center of the dispute was a 2013 change to the company’s policy that attempted to offer a broader policy for employees who take leave as new parents. The EEOC sued the company for giving a male employee two weeks of parental leave for child bonding time, rather than the six for women.

The more than 200 men were represented in the EEOC’s lawsuit and will share in a $1.1 million award. In May, the company adopted a revised parental leave policy. A team from Jackson Lewis, including John Nolan, Philip Rosen and Francis Alvarez, represented Estée Lauder in the case in the U.S. District Court for the Eastern District of Pennsylvania.

Nolan, who co-leads the firm’s general employment litigation team, provided a statement from Estée that said it expanded benefits “to ensure that we foster an inclusive, progressive, and supportive environment for all our employees.”

“These are significant steps to ensure our benefits policies are consistent with our company values and are among the most supportive offered by any major company to its employees in support of working families,” the statement said.

Under the terms of the settlement, Estée Lauder will now provide all eligible full-time employees, regardless of gender or caregiver status, the same rights to 20 weeks of paid leave for the purposes of child bonding and the same rights to a six-week flexibility period to return to work from the parental leave.The new policies are retroactively available to employees who experienced a qualifying event, including birth, adoption or foster parenting, on or after Jan. 1, 2018. The deal included disability management training.

Companies tout paid leave programs to attract and retain workers. The Society for Human Resource Management found that more than one in three U.S. employers offers paid parental leave beyond the amount required, up from one in six earlier this decade. This includes policies that specifically offer paternity leave for new fathers, new adoptive parents and same-sex couples.

A claim filed last year by the American Civil Liberties Union and Outten & Golden targeted a parental leave policy at JPMorgan Chase & Co. that gave “secondary caregivers” less paid leave than primary caregivers, and considered “birth mothers” rather than fathers. That claim is still pending before the EEOC.

Several large banks, including Goldman Sachs Group Inc. and Morgan Stanley, have policies that give between 12 and 16 weeks for primary caregivers and two to four weeks for secondary caregivers.

“I don’t think lawyers or government lawyers are thinking about parental leave in different legal framework. I think what’s changed is American workers are interested in parental leave as a benefit,” said Peter Romer-Friedman, an Outten & Golden lawyer in Washington who represents the worker in the charge against JPMorgan. “Large and small companies recruit workers based on important benefits like parental leave. Work issues become more prominent, it’s natural that employees and workers will ask why there is discrimination in providing this kind of important benefit.”

States are passing more programs that create paid leave programs, including Massachusetts, New York, Washington and California. Ivanka Trump has pushed for a national program, but attempts have fallen short.

Only seven economies in the world do not have a paid leave policy, and the U.S. is the only high-income economy in that group, according to a report released this year by the World Bank Group’s Indicator Development Unit. The other economies include the Marshall Islands, the Federated States of Micronesia, Palau, Papua New Guinea, Suriname and Tonga.

Countries that give too much time for maternity leave or early retirement for women can exacerbate the divide, according to the report. Meanwhile, some countries, such as France, incentivize both parents to take leave, which helps push the idea of equal child care.

The report said women tend to use leave more than men. Although longer and higher paid leave for mothers has significant benefits, too much time out of the labor force may negatively affect a woman’s career progression and earnings. “The key to designing leave policies that do not exacerbate gender inequality may be in promoting fathers’ uptake of leave,” the report said.

A recent U.S. Census Bureau study found that if a woman has a baby between the age of 25 and 35, her pay will never recover relative to her husband. That gap for men and women, according to the study, is a key time to bulk up on experience and skills and connections. Women who have babies during that time miss out on that.

Courtney Blanchard, an attorney at Nilan Johnson Lewis who works with companies to develop leave programs, said the 40 sick leave programs across the country create a compliance patchwork for companies.

The consent decree involving Estée Lauder should serve as a reminder to companies to review their own policies and how they define parental leave, she said.

“The key takeaway is any leave for the purpose of bonding must be available to all employees in the same amount,” Blanchard said. “Companies need to take a long look at the leave they provide. The EEOC has shown it is willing to take on these cases. Companies will need to craft a policy that will avoid the risk of enforcement and also become a way to attract employees.”

St. Louis-based employment and labor attorney Katherine Fechte said employers offering such benefits should be cautious as they draft and administer paid leave policies to avoid discrimination claims for offering new fathers less paid parental leave than new moms.

“Employers that offer paid parental leave or are considering offering it should evaluate their rationale for providing the leave,” said Fechte of Greensfelder, Hemker & Gale. “If it is to give new parents time to care for a new baby, male and female employees should receive the same amount of leave. Being more generous with paid leave to new mothers could mean discrimination claims by new fathers are looming.”

Court cases addressing paid parental leave are limited. In 2005, the U.S. Court of Appeals for the Eighth Circuit gave some direction in the case Johnson v. University of Iowa. The appeals court ruled against a father who challenged a University of Iowa policy that allowed biological mothers and adoptive parents to use accumulated sick leave upon arrival of a new child without extending the same benefit to biological fathers.

“The court’s finding that the policy was not discriminatory can be indicative of how other courts would decide the issue,” Fechte said.